The opinion of the court was delivered by: ALFRED WOLIN, Senior District Judge.
This matter is before the Court on a joint application by
counsel for plaintiffs Krell and Johnson for an award of fees and
expenses in the class action lawsuit against the Prudential
Insurance Company of America ("Prudential"). Krell is represented
by Malakoff, Doyle & Finberg, P.C., Murray and Murray Co.,
L.P.A., Wilson, Frame, Benninger & Metheney, P.L.L.C., Berger
& Lagnese, LLC, and Leesfield, Leighton, Rubio, Mahfood,
& Boyers, P.A. Johnson is represented by the Law Offices of
Richard H. Rosenthal, P.C. and the Selden Law Firm.
All interested parties have had the opportunity to submit
written arguments with respect to this fee petition.
Additionally, all of the parties have provided the supplemental
information requested by this Court in its order dated June 12,
2002. The Court will decide the matter on the papers pursuant to
Federal Rule of Civil Procedure 78. For the reasons stated
herein, the application for fees and expenses will be granted in
part and denied in part.
PROCEDURAL AND FACTUAL
The Court will not review the lengthy history of this
litigation. Instead, the Court refers its readers to the facts
and procedural history of this case as set forth in its prior
opinions and the opinion of the Third Circuit. See In re
Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 450
(D.N.J. 1997) (approving class action settlement); In re
Prudential Ins. Co. of Am. Sales Practices Litig., 962 F. Supp. 572
(D.N.J. 1997), aff'd in part, vacated in part, 148 F.3d 283
(3d Cir. 1998) (awarding attorneys' fees to lead class counsel);
In re Prudential Ins. Co. of Am. Sales Practice Litig.,
106 F. Supp.2d 721 (D.N.J. 2000) (awarding attorneys' fees to lead class
counsel). Further discussion of the proceedings in this matter,
specifically, the conduct of Michael P. Malakoff ("Malakoff"),
one of the attorneys representing Krell, can be found in two
opinions addressing a motion for sanctions brought against
Malakoff. See In re Prudential Ins. Co. of Am. Sales Practices
Litig., 63 F. Supp.2d 516 (D.N.J. 1999) (Walls, J.), aff'd in
part, rev'd in part, In re Prudential Ins. Co. of Am. Sales
Practice Litig. Agent Actions, 278 F.3d 175
(3d Cir. 2002).
In the instant motion, counsel for Krell and Johnson jointly
request attorneys' fees, costs and expenses totaling $2.25
million.*fn1 On March 8, 1999, the lead counsel for the plaintiffs
entered into a stipulation with counsel for Krell and Johnson
(collectively referred to as the "Objectors"), agreeing that the
Objectors would not oppose lead counsel's application for a $90
million fee award, and in return, lead counsel would not oppose
the Objectors' application for a fee award of up to $2.25 million
plus interest earned thereon from the earlier of the Finality
Date, as defined in the stipulation or July 1, 1999.*fn2
The parties agreed, or in some cases the Objectors asserted and
lead counsel did not dispute, that there were several ways the
Objectors added value to the settlement. First, the parties
agreed that the Objectors' objections to the notice materials and
claim form were a material factor in the decision to amend such
forms. The parties agreed that because of the amended forms, "at
least 2-1/2% additional ADR claims (at least 12,500) were
remediated at a score of "2" or higher that otherwise would not
have been remedied. Co-Lead Counsel reasonably believes that the
value of remediation of 12,500 ADR claims would exceed $50
Second, the Objectors asserted and lead counsel did not dispute
that by appealing this Court's settlement and fee award to the
Third Circuit, the Objectors delayed the payment of approximately
$41 million in fees and expenses for about two years, resulting
in about $4.8 million in time value to Prudential.
Third, the Objectors asserted and lead counsel did not dispute
that because the appeal to the Third Circuit delayed CoLead
Counsel's final fee and expense application, the application was
not made until the number of remediated ADR claims was better
known, which provided an unspecified value to the Class. The
Objectors claim that, by their conservative estimate, they
contributed approximately $56 million in value to the
The Objectors' verified petition for attorneys' fees contains a
plethora of justifications for the requested fee award.
Interestingly, the Objectors fail to cite one case in support of
the proposition that as objectors, they are entitled to
attorneys' fees. The Court reminds the Objectors that they played
a different role in this litigation from that of Class Counsel.
The Court, therefore, will not treat their petition for fees as
if they were class counsel, and the Objectors will not be awarded
fees for all of their work conducted in the course of this
matter. Instead, the Court will follow precedent and award fees
which reflect the value the Objectors conferred upon the class.
While "[a]n objector to a class action settlement is not
generally entitled to an award of counsel fees," In re Domestic
Air Transp. Antitrust Litig., 148 F.R.D. 297, 358 (N.D.Ga. 1993),
objectors are entitled to compensation for attorneys' fees and
expenses if the settlement was improved as a result of their
efforts. See In re Westinghouse Sec. Litig., 219 F. Supp.2d 657,
660 (W.D.Pa. 2002) (quoting White v. Auerbach, 500 F.2d 822, 828
(2d Cir. 1974)). If objectors are successful in challenging an
award of attorneys' fees to lead class counsel, their objections
have conferred a benefit on the class. See id. (citations
omitted); see also Vizcaino v. Microsoft Corp., 290 F.3d 1043,
1051-52 (9th Cir.), cert. denied, 537 U.S. 1018, 123 S.Ct. 536,
154 L.Ed.2d 425 (2002); In re BankAm. Corp. Sec. Litig.,
228 F. Supp.2d 1061, 1069-70 (E.D.Mo. 2002); In re Horizon/CMS
Healthcare Corp. Sec. Litig., 3 F. Supp.2d 1208, 1215 (D.N.M.
As an initial matter, the Court will address the fee
applications made by attorneys John T. Murray (from the firm of
Murray & Murray Co., L.P.A.), and J. Michael Benninger (from
the law firm of Wilson, Frame, Benninger, & Metheney,
P.L.L.C.). While the Court does not doubt that these attorneys
played an instrumental role in voicing the objections of their
clients, the record before this Court demonstrates that they did
not substantially participate in the objections made to the
settlement or to the Court's award of fees to Class Counsel.
For example, the records submitted by John Murray indicate that
the firm did not
contribute in any way to the settlement or fee award objections.
J. Michael Benninger certified that his work was conducted in the
preliminary stages of the case, and that his "legal services were
performed before this case was ultimately removed from state
court in West Virginia and transferred to this Court." The Court
finds that these attorneys have not meaningfully contributed to
the settlement or award of attorneys' fees, and accordingly, the
Court will deny their request for attorneys' fees and expenses.*fn3
The Court now turns to the fee petition submitted by the
remaining movants herein. When addressing a request for fees in a
class action, a district court is typically required to
thoroughly analyze the application, even where the parties have
agreed to the award, because of the "`danger . . . that the
lawyers might urge a class settlement at a low figure or on a
less-thanoptimal basis in exchange for red-carpet treatment for
fees.'" In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods.
Liab. Litig., 55 F.3d 768, 820 n. 39 (3d Cir. 1995) (citation
omitted). This danger arises because generally, "`a defendant is
interested only in disposing of the total claim asserted against
it; . . . the allocation between the class payment and attorneys'
fees is of little or no interest to the defense.'" Id. at 819-20
(quoting Prandini v. Nat'l Tea Co., 557 F.2d 1015, 1020 (3d Cir.
1977)). Thus, the amount of attorneys' fees and expenses to be
awarded is within the court's sound discretion. See id. at 820.
Here, however, the Court is not faced with those typical
concerns. The agreement under consideration was not made between
Class Counsel and the defendant, but instead, between the Class
Counsel and the Objectors. The fees to be paid to the Objectors
have already been designated as part of the fees paid to Class
Counsel, and the money has been set aside in escrow. The fee
award does not involve the defendant, and it does not in any way
compromise the value of the class settlement. Nevertheless, the
Court has undertaken a thorough analysis of the fee application
There are two methods used by courts for determining whether an
attorney's request for fees is reasonable the lodestar
approach and the percentage-ofrecovery approach. See In re
Cendant Corp. PRIDES Litig., 243 F.3d 722, 732 (3d Cir.), cert.
denied, 534 U.S. 889, 122 S.Ct. 202, 151 L.Ed.2d 143 (2001). The
lodestar method is commonly used in statutory fee-shifting cases,
while the percentage-of-recovery method is favored in cases
involving a common fund. See id. The percentage-of-recovery
method "is designed to allow courts to award fees from the fund
`in a manner that rewards counsel for success and penalizes it
for failure.'" Id. (citing In re Prudential, 148 F.3d at 333).
The Court chooses to use the percentage-of-recovery method to
analyze the fee application here. The Objectors seek fees based
on their success in adding value to the class settlement, and the
percentageof-recovery method is designed to reward attorneys for
such successes. Moreover, the fee award to the Objectors is
intended to reflect only the value they added to the settlement.
By this award, the Court does not mean to reimburse the Objectors
for all of their litigation costs. While the attorneys have
submitted detailed billing records to this Court, ...